On 25 November 2019, at the ASEAN-Republic of Korea Commemorative Summit and the First Mekong-ROK Summit in Busan, Korea, the Royal Government of Cambodia ("RGC") and the Republic of Korea entered into an agreement for the avoidance of double taxation ("DTA"). Signed by the Cambodian Minister of Foreign Affairs and International Corporation Prak Sokhonn and his Korean counterpart Kang Kyung-wha, the DTA is the ninth that the RGC has entered into with a foreign country. RGC has signed eight other agreements with Brunei, China, Hong Kong, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
The DTA has provisions similar to those signed with the other eight countries, including that which allows the tax residents in Cambodia and South Korea to be provided with a corporate tax credit for income that has been subject to tax in the counterparty's jurisdiction. The treaty also provides for a reduction in the standard withholding tax rates for cross border transactions between the two jurisdictions. In addition, the treaty provides an information exchange mechanism between the tax authorities of both countries to enhance tax enforcement against tax evasion, base erosion and profit shifting by taxpayers.
The DTA will come into force after the completion of ratification procedures by both countries.
The DTA between the Philippines and the RGC is in the pipeline and may soon be concluded, according to a recent report from the Philippine Department of Finance.
On 3 November 2019, the Law on Construction entered into force ("Law"). The Law aims to establish principles, building technical regulations, and rules and procedures for construction sector management throughout Cambodia to ensure quality, security, safety and greater efficiency across this sector.
Under the Law, the Ministry of Land Management, Urban Planning and Construction (MLMUPC) is the competent authority that oversees and manages the construction sector.
The Law includes various provisions related to construction authorisation and construction site inspections. For example, entities that carry out any construction activity such as repair, modification, installation or demolition work are required to obtain approval from the competent authority before commencing such an activity. They must also obtain a construction site opening permit prior to the commencement of a construction and a site closing permit upon completion of the construction.
The Law features new provisions including those that relate to: (i) the obligation of an owner to obtain an occupancy certificate; (ii) defect liabilities; and (ii) the carrying out of quality and safety inspections of all buildings within a stipulated period.
As many buildings are currently not in compliance with the Law, the Law provides for a two-year 'grace' period to building owners to give them sufficient time to make the necessary changes to comply with the Law. Owners of existing constructions that were built without the necessary permits or those that are considered non-compliant before enforcement of the Law should apply for an occupancy certificate within two years from the Law coming into operation.
On 2 November 2019, the Law on E-Commerce ("E-Commerce Law") was promulgated. The E-Commerce Law aims to: (i) govern electronic commerce in Cambodia; (ii) provide legal certainty in commercial and civil transactions by electronic system; and (iii) promote public confidence in using electronic communication. The E-Commerce Law does not apply to activities, documents and transactions related to: (i) the formation or enforcement of powers of attorney; (ii) the formation or execution of a testament, codicil or other matters relating to succession; (iii) any contract for the sale, transfer or disposition of rights to immovable property or any interests in such immovable property; (iv) the transfer of immovable property or any interests relating to the immovable property; and (v) any other exceptions as may be provided for by a sub-decree.
The E-Commerce Law provides legal recognition on the validity of electronic communications and signatures, and supports the use of electronic communications in contract formation and as evidence. It also sets out the requirements on electronic records and signatures, imposes liabilities on intermediaries and electronic commerce service providers, and lays down the foundation for electronic filing with governmental institutions.
Under the E-Commerce Law, electronic payment businesses, intermediaries, and electronic commerce service providers are required to obtain approvals/licenses from the relevant authorities before commencing operations or engaging in certain activities. In addition, the E-Commerce Law imposes on these entities disclosure and data protection obligations, and requires them to offer their customers the option to reject unsolicited commercial communications.
After entering into force, the E-Commerce Law shall first be broadcast for a period of six months before its implementation.
On 2 November 2019, to support Cambodia's rapidly growing economy, the Law on Consumer Protection ("CP Law") was promulgated, alongside the Law on Construction and the Law on E-Commerce.
The CP Law sets out rules to guarantee the rights of consumers and ensure that businesses conduct commercial activities in Cambodia fairly. The CP Law applies to any person who conducts any trading activities in Cambodia, regardless of whether these activities are for profit. It applies to the sale of goods, services, and real rights over immovable property.
Pursuant to the CP Law, a National Committee on Consumer Protection (NCCP) will be established to be Cambodia’s competent authority for consumer protection. One of its mandates is to encourage consumers in each industry to form associations to protect their respective interests.
The CP Law provides a non-exhaustive list of examples of unfair trading activities and practices. It stipulates that any activity or practice that provides false, misleading, or deceptive advertisements, and any business model that is equivalent to a pyramid scheme, are deemed unfair trading activities and practices. The activities that may constitute unfair trading activities and practices in specific industries may be provided by future regulations.
The CP Law also prescribes the minimum disclosure of information standards that businesses must meet with respect to consumers, such as the labeling requirements. The standards applicable to specific industries will also be prescribed by the relevant industry regulators. One notable standard that must be observed in providing information to the consumers is the use of the Khmer language in product labels.
